The boom times for foreign investment in Australia's housing market are over

The trend for Australian homes being bought by foreign investors is now reversing, and fast.

Property professionals said the level of homes sold to foreign investors fell to multi-year lows in the September quarter.

The results fit with other data on offshore property investment in Australia, including official data from Australia’s Foreign Investment Review Board (FIRB).

The boom in Australian real estate sales to foreign investors has run its course, according to the National Australia Bank’s latest Residential Property survey, falling to the lowest proportion in seven years.

Based on self reporting from the more than 300 property experts surveyed, just 8.1% of all newly-completed homes, and 4.1% of existing properties, were sold to foreigners in the three months to September, continuing the well-established downtrend seen in recent years.

NAB

“The results continue to highlight a decline in foreign buying activity resulting from policy changes in China on foreign investment outflows and tighter restrictions on foreign property buyers in Australia,” the NAB said.

The results also fit with the sharp plunge in applications received from offshore investors to buy Australian residential property in the 2016/17 financial year.

While those figures only capture applications to buy, not actual purchases, it suggests that offshore demand for Aussie property has weakened sharply compared to levels seen in prior years.

Adding credence to that view, separate analysis from Juwai.com, a leading Chinese Global Property Investment portal, estimated that Chinese investment in Australian property fell by 26.8% to $US17.4 billion last year.

It found that residential investment made up the vast amount at $US14.1 billion.

Based on the responses seen in the latest NAB survey, it looks like those trends have continued into 2018.

By location, survey respondents said the share of sales to foreign investors for new homes fell in all states except Victoria over the past quarter.

NAB

Similar results were also reported for the proportion of sales for established dwellings over the same period.

NAB

While volatile quarter-to-quarter, the market share has clearly been trending lower over recent years.

Like the NAB, Australia’s FIRB says the introduction of capital controls in China in early 2017, limiting the ability for citizens to get their money out of the country, especially for property purchases, largely explained the drop off in offshore demand seen in recent years.